2009-03-05 Discovery Abuse Findings and Sanctions Order in Bray & Gillespie v Lexington Insurance Company

This sanctions order, issued yesterday by Magistrate Judge Karla Spaulding of the Middle District of Florida, warrants an extended post. Purely imo, I think it’s significance compares with Magistrate Judge Major’s decision in Qualcomm v Broadcom. Of course, it ain't over till it's over, and that means we'll have to await (1) the District Judge's approval and adoption of Magistrate Judge Spaulding's Order (not a Report and Recommendation), and any appeal (whether to the District Judge or to the 11th Circuit).

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Case: Bray & Gillespie Management, LLC., et al. v. Lexington Ins. Co., et al.
Citation: 2009 WL546429 (MD FL 2009)
Date: 2009-03-04
Topics: eDiscovery abuse, client and law firm sanction, attorney sanction, sanctions based on inherent powers and Fed.R. Civ. P. Rule 37, inherent power to sanction non-parties for bad faith conduct, non-compliance with form of production, failure to produce metadata, deletion, alteration
or manipulation of metadata, attorney misunderstanding technical terms (competency), attorneys as fact witnesses in ESI discovery proceedings, TIFF images are not native format ESI, TIFF images deemed not maintained in "ordinary course of business".

Imo, this 51 page decision ranks in significance with the 2008 Qualcomm v Broadcom sanctions order. In what appears to be turning into an epic discovery abuse decision from the U.S. District Court from the Middle District of Florida, U.S. Magistrate Judge Karla Spaulding sets context by recounting the numerous discovery conferences and two days of evidentiary hearings regarding "ongoing difficulties with the form of production of electronically stored information ("ESI") by Plaintiffs.

In the instant proceedings Defendant Lexington sought "an order compelling ESI production "in the form specified in its request for production of documents ("RFP")" awarding sanctions for continuing non-compliance with Fed.R.Civ.P. Rule 34, and M.J. Spaulding’s April 11, 2008 Order compelling discovery responses to certain of Defendant Lexington’s requests.

The short of it: Defendants requested ESI produced in native data format, or in the alternative, in "Extractiva" format. Plaintiff B&G failed to produce in the form specified by Defendants. Bad juju, and we’re only on page 2.

Then, the eDiscovery actions of Plaintiff’s counsel are placed under intense judicial scrutiny. Magistrate Judge Spaulding notes that although "[C]ounsel for Plaintiffs argued that the form of production was substantially justified," [B&G’s counsel’s] arguments were "premised on material misrepresentations and omission regarding facts underlying the form in which ESI was maintained by B&G and provided to its lawyers." (Bad juju, and we're still on page 2)

But wait, it gets worse:

"Accordingly, while Lexington seeks sanctions only against B&G, this Court has also put counsel of record for B&G on notice that certain lawyers at Reed Smith, LLP, who made the misrepresentations and withheld material information, Reed Smith, LLP, and B&G’s in-house counsel are also subject to sanctions."

This case involved a dispute about insurance coverage claims for hurricane damages sustained by Plaintiff B&G in 2004. Anderson, Kill & Olick ("AKO") represented B&G in connection with its claims submission. In connection with these activities, both electronic and paper records were gathered by B&G’s counsel AKO. Paper docs were scanned, other ESI (such as emails and email attachments) were "downloaded in native data format."

Magistrate Judge Spaulding is nothing if not definitionally precise: for purposes of the instant decision, she defines ESI as information that is first instantiated electronically, rather than scanned from paper to generate a digital image:

"FN3 Throughout this Order, I will use ESI to refer only to electronically stored information, not to information that was scanned from paper form to a digital image."

Both scans and ESI were copied to a hard drive ("Target Hard Drive") at B&G counsel AKO's office, where a program called "Extractiva" was "used to convert the scanned documents and ESI to TIFF images. (In footnote 4, the Court quoting from the Sedona Principles, notes that .tiff images ""lose searchable text and metadata that might enable better understanding and utility of the evidence.""). AKO failed to instruct anyone to exclude metadata thought would be automatically captured by Extractiva. After loading the .tiff images and associated metadata into an Introspect database, the "Target Hard Drive" was put into storage.

The complaint was filed in February 2007, and the Orlando office of Boies, Schiller and Flexner ("Boies Schiller") was substituted as AKO's local counsel. In January of 2008, John Ellison, one of AKO's partners handling the case thereafter joined Reed Smith as partner. Ellison did not withdraw and continued to co-counsel for plaintiff B&G.

In March 2008, B&G discharged AKO as counsel and John Ellison and Reed Smith "effectively became B&G's lead attorney." AKO subsequently moved to withdraw as counsel, and the Court permitted its withdrawal, conditioned upon AKO's delivery of all discovery materials and other litigation-centric documents to new counsel Reed Smith.

BlogNote: Stay with me. This timeline plays an important role in the Court's reasoning.

Sometime "after May 2, 2008" Reed Smith partner John Berringer became involved in the case, and asked Reed Smith associate Jeremy Heinnickel to assist with eDiscovery issues. Meanwhile, attorney W. Bruce DelValle, formerly outside counsel for plaintiff B&G, entered his appearance as in-house counsel for B&G, and substituted as local attorney for Boies Schiller. In September 2008, B&G filed for bankruptcy protection, and thereafter attorney Michael Beaudine and "other lawyers" at Latham, Shuker, Eden & Beaudine appeared as co-counsel for B&G. Defendant Lexington has been represented throughout by Daniel C. Brown at Carlton Fields (Carlton Fields).

Ok, now that the cast of main characters is set, on to the proceedings:

In their August 2007 Case Management report, the parties reported that they believed eDiscovery was necessary, but after meeting and conferring, could not reach an agreement on form of ESI production. That said, defendant Lexington's second RPD requested ESI, and specified form of ESI production pursuant to Fed. R. Civ. P/ Rule 34(b)(1)(C) as follows:

"Electronically stored information" includes all "electronically stored information" as that term is used in Federal Rules of Civil Procedure 26(a)(1)(B) and 34(a)(1). . . . As used in these Requests for Production a request for "electronically stored information" calls upon you to produce such information, without deletion or alteration of meta-data, in its native form, and to indicate the computer hardware and software program(s) needed to translate the information into usable form in the information’s native format. Lexington RFP 1 at 5 ¶ J (emphasis in original); Lexington RFP 2 at 3 ¶ G (same).

"Document" includes electronically stored information – including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations–stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form."

Defendant Lexington's further instructions to B&G:

"Please state, for each item of electronically stored information, the hardware, medium (for example, "compact disk" or "compact disk reader") and software program required to inspect the information contained in the item in the native format in which the information is stored and the computer hardware and software required to copy the information in such native format."


Despite these requests, plaintiff B&G's counsel objected to the "requested form for producing electronically stored information (something the Court notes that the FRCP do not permit) but did not object to B&G's ESI definitions or to its native data format requests.


What B&G Produced - The Meaning of "Scanned"

In response to defendant's second RPD, B&G produced 27 discs containing .tiff images of paper documents produced previously to defendant Lexington. The B&G attorney at AKO signed the RFP responses for B&G understood "scanned" to mean converting paper documents to an electronically stored image. The Court "credited that attorneys testimony only to the extent that it referred to scanning of "documents that originally existed in paper form, and not production of ESI."
You can see where this is heading...

B&G, without objecting to Defendant Lexington ESI format request, served a supplemental response, and then an amended supplemental response, to Lexington's RPD. Although B&G asserted in a discovery conference that it had:

"produced about 100,000 e-mail documents categorized by sender's email in-box" and that "about 100,000 electronic non-email documents...are into the queue and will be produced in the next two weeks or so, perhaps even earlier."

The problem: the ESI had been produced as .tiff images without metadata. As you might surmise, Rule 37 motion practice ensued, and on April 11, 2008, Magistrate Judge Spaulding issued an order compelling plaintiff B&G to respond to the request as instructed in that request (and provide native format data, etc.).


B&G's ESI Representations

At a March 28, 2008 discovery conference, counsel for B&G (Reed Smith) represented that a March 14 CD contained email and attachments. Upon examination, defendant Lexington's counsel discovered that the disc "contained 108,845 documents in .tiff format. The Court then makes the
following point perfectly clear:

"TIFF images are not the native format of email or other ESI"

To steal a line from Bugs and company, that's not all, folks. The Court also notes that:

"Similarly, Lexington’s counsel discovered that the April 30 Discs contained at least 721,331 pages of documents, many of which were e-mails. See Doc. No. 202-9 ¶¶ 5-6. All of the documents were TIFF images with no metadata and no coding that would allow the documents to be searched by fields, such as creation date, last modification date, author, or subject. Doc. No. 202-10 ¶¶ 5-7; see also Doc. No. 222-2 ¶ 5. Thus, both the March 14 Disc and the April 30 Discs did not comply with Lexington’s specifications in its RFPs that ESI be produced in native format without alteration or deletion of metadata. The April 30 Discs also did not comply with the April 11 Order directing B&G to produce documents responsive to the specific requests identified in the Renewed Motion to Compel."

At minimum, the Court points out, TIFF format "eliminated" search capabilities, and OCR conversion would have been necessary to make the images searchable. "Accordingly," the Court states, "the March 14 Disc and the April 30 Disc contain ESI that was not in reasonably usable form."

BlogNote: Although I would have argued in addition that .TIFF's are not ESI (and that, as such these files never existed as original ESI), Judge Spaulding does cite Judge Scheindlin's new Digital Evidence book as source for her reason why a .tiff file is not generally "reasonably usable:

"FN9 When a person "scans" a document, the resulting electronic output is stored as a picture of the document, such as in the TIFF images produced by B&G in this case. See SHIRA A. SCHEINDLIN, DANIEL J. CAPRA, ELECTRONIC DISCOVERY AND DIGITAL EVIDENCE 708 (2009) [hereinafter "ELECTRONIC DISCOVERY"] (A scanner is "[a]n input device commonly used to convert paper documents into images."). OCR used to convert physical documents or
electronic images into text files has significant limitations. OCR generally does not recognize handwriting. If the image file is of poor quality, OCR often cannot produce usable text files. Id. at 696."


Section "D" to the Order: "Berringer's False Story About How B&G Collected ESI"

One could argue that no blanks need be filled in other than the caption to Section "D" to the Order.

That said, this is where this decision begins to resemble Magistrate Judge Major's 2008 eDiscovery abuse decision in Qualcomm v Broadcom. Some choice excerpts follow.

"During the course of the negotiations to resolve the dispute regarding the form of production of ESI, [Reed Smith attorney] Berringer concocted a story about the process that B&G and AKO used to gather the discoverable documents"



How Not to Produce ESI in Native Data Format: Claim that Client Printed Files and Scanned into .tiff Format

"Berringer explained that "B&G printed the documents from B&G’s electronic systems. B&G sent the printed documents to Anderson Kill. Anderson Kill scanned the documents to create TIFF images of them . . . , from which production was then made." Doc. No. 202 at 15 n.11 (emphasis in original) (Counsel for Lexington’s description of the explanation)."

The Court states that B&G's attorney Berringer was aware of quite the opposite:

""In creating this false tale, Berringer ignored numerous facts known or readily available to him about the actual process that was used to collect ESI and produce it to Lexington. On April 9, 2008, Berringer defended a deposition of Harold Lueken, formerly in-house counsel for B&G, who
testified that information was "electronically transferred" and given to AKO in 2006."


Willful Blindness of B&G's Retained Counsel

The Court was not sparing in its depiction of B&G's outside counsel's discovery behavior:

"Reed Smith attorneys had access to the Introspect database before and after AKO transferred it to Reed Smith. If he had reviewed the Introspect database, Berringer would have seen that it contained ESI metadata. Finally, Berringer could simply have contacted AKO to learn how the information was gathered. See id. at 344 (Berringer did not seek information from AKO about
the scope of the agreement to produce scanned copies of documents in lieu of hard copies); accord. Id. at 238, 259-61 (cooperation between AKO and Reed Smith).10"

"The false explanation Berringer gave regarding how ESI had been collected was based, at best, on willful blindness which unreasonably prolonged and multiplied the proceedings regarding the ESI discovery dispute."

On May 27, 2008, Defendant Lexington filed a Third Motion for Sanctions including a Third Motion to Compel Production of ESI (I believe that is how the pleading was captioned). The Court notes that "Lexington argued, in sum, that B&G violated Rule 34 by failing to produce ESI in the form specified in Lexington’s RFPs and violated the April 11 Order by producing the April 30 Discs, which did not comply with the specified form of production of ESI. Lexington sought an order compelling production of ESI in the form specified in Lexington’s RFPs, striking portions of B&G’s claims to which the requests for production at issue pertained, and awarding Lexington the reasonable costs, including attorney’s fees, it incurred in filing the motion."

Plaintiff B&G countered with arguments, inter alia, that

(1) Lexington had not specified form of request in initial case management cnference did in its RFP),
(2) the RPD contained definitions buried in boilerplate,
(3) the native format data requests were overly burdensome, and
(4) that the documents were "provided 'as kept in the usual course of business,'" citing to several out-of-circuit cases in which courts determined that failure to produce metadata did not violate Rule 34.

(BlogNote: Quick retreat to the timeline: On June 28, 2008 the Introspect data base was transferred to B&G new counsel, Reed Smith. As of June 28, 2008, therefore, Reed Smith had a copy of the Target Hard Drive, replete with all ESI and associated metadata.)

Counsel for the parties continued to confer in an attempt to resolve or narrow eDiscovery issues throughout June 2008. On June 23, Reed Smith attorneys disclosed defendants' counsel that B&G's ESI had not been "printed and scanned," but rather, that "native format emails were collected and then converted into TIFF images using a program that set to selectively exclude
certain types of metadata."


What Defines Non-Cooperation, or, How Not to Cooperate

"During these [June 2008] discussions, Reed Smith attorneys did not disclose what metadata the Introspect database actually contained; did not disclose how the ESI in native format was transferred to the Introspect database; and did not disclose the existence of the Target Hard Drive or that Reed Smith had a copy of it in its possession."

B&G's counsel at Reed Smith attorneys then offered to produce "load files" (of a type not discussed) containing "seven basic metadata fields for the TIFF images previously produced..."


Metadata Offered, Then Offer Withdrawn

Here's where it gets murky. Or messy. Or ugly, depending upon your pov. At one point, Reed Smith attorney Berringer offered to give defendant Lexington "all of the metadata in the Introspect database," but then and apparently without explanation, retracted that offer:

"When defense counsel asked that B&G disclose in writing the metadata contained in the Introspect database, among other things, Berringer withdrew the offer."


The June 25, 2008 Evidentiary Hearing - Semantics Gives Way to Facts

At an evidentiary hearing held in June 2008, defendant's technology expert opined that "the discs contained ESI that had been converted to TIFF images, not scanned copies of paper documents. The discs had metadata showing the beginning and ending of each page, but no other metadata and no text search capabilities.

As well, the Court noted, there was no ability to link email by conversation thread, link attachments to particular emails, no hash values (to determine if ESI is/are duplicates). The expert also testified that the conversion of spreadsheets into TIFF images made the spreadsheets essentially unreadable and "did not disclose the underlying formulas for financial calculations."

Perhaps not coincidentally, it was only after defendant's expert's testimony that attorney Berringer "revealed to the Court for the first time" that he had "learned that ESI had been copied to the Target Hard Drive and converted to TIFF images stored into the Introspect database."

BlogNote: Some disclosures are better not left for a closing argument in a sanctions hearing:

"Ellison and Berringer did not disclose until closing argument, that sometime before June 20, 2008, [the] Reed Smith analyst reviewed the Introspect database and the Target Hard Drive and told [Reed Smith associate] Heinnickel that metadata existed for the documents on the March 14 and April 30 Discs."


When Cornered, Blame Your Adversary

B&G's counsel, Reed Smith attorneys Ellison and Berringer "repeatedly argued that their failure to learn and disclose the correct information about the gathering and production of ESI was the result of AKO's (Plaintiff's predecessor counsel) refusal to provide them information."

That dog wouldn't hunt.


June 2008 Sanctions Imposed on Plaintiff B&G for ESI Manipulation

The failure to produce metadata, or strip it away by means of flattening ESI into an unsearchable .TIFF sans metadata is addressed by Magistrate Judge Spaulding assessing fault and imposing monetary penalties:

"At the conclusion of the hearing, I found that B&G "directly or through their agents deliberately manipulated the electronically stored information in such a way as to withhold from the defendants the information that had been requested, specifically metadata." Id. at 196.15

"I further found that the problems with the ESI production were caused by B&G and its agents, and therefore "they will be the ones to bear the burden of whatever cost it takes to get" the ESI produced in a usable format."

It is perhaps noteworthy to point out that Plaintiff B&G appealed the June 2008 Order to the District Judge, in essence asserting the Magistrate Judge Spaulding had (1) erred by failing to reduce her order to writing, and (2) that the Court abused its discretion by requiring expedited production of ESI "too quickly" and thereby placing an undue burden on Plaintiffs. Not surprisingly, the District Judge overruled Plaintiff B&G's and "affirmed the order in all aspects."

Thereafter, in attempted compliance, Plaintiff B&G provided Lexington with a hard drive ("B&G Hard Drive") that "was not complete, not in the original format, and not as maintained by B&G in the ordinary course of business."


Re-Opened Sanction Hearing December 8 2008

In October 2008, the Court issued a notice to B&G's in house counsel,to Reed Smith attorney Berringer, and the Reed Smith firm, affording them an opportunity to file a supplemental response addressing "why sanctions should not be imposed against any or all of them as the attorney(s) responsible for the sanctionable conduct." The Court also later re-opened the June 8, 2008
evidentiary hearing.


When Cornered A Second Time, Blame Predecessor Counsel

B&G outside counsel's supplemented response at the re-opened evidentiary and sanctions hearing:

"In their supplemental response to the motion for sanctions, Reed Smith and Ellison again asserted that "[b]ecause of the poor communication with prior counsel, and the termination of B&G’s prior chief legal officer, it has proven difficult for Reed Smith and John Ellison to get the facts about
Plaintiffs’ document production.""


The December 8, 2008 Hearing

Cast blame Plaintiff B&G's current counsel tried, but come the hearing, predecessor counsel AKO testified through its attorneys that AKO "always cooperated with Reed Smith...allowing [them] unrestricted remote access to the Introspect database."

Nevertheless, at this point, and with a torrent of impeachment testimony provided by Plaintiff's B&G's predecessor counsel AKO, B&G's current counsel began conceding points... and at the hearing, one of Reed Smith's attorneys conceded that the "asserted" communications problems between Reed Smith and AKO were "'overstated.'"

"[B&G co-lead counsel and Reed Smith Attorney]Berringer conceded that he had incorrectly advised defense counsel that ESI contained in the Introspect database had been printed and scanned."

Berringer also testified about, well, I think he testified about his misunderstanding of "how the hard drive c[a]me about." The following testimonial excerpt is included solely to point out a rather feeble (strictly imo) attempt at feigned technological ignorance:

"I asked Jeremy [Heinnickel] and I’m sure we asked the client, how did this target hard drive come about? Every time we raised the question, we were told that Maya Cater and Leuken were involved. "You’d have to talk to them." But every time we raised the question, somebody talked about the [student interns]. And I guess what happened was I just translated that, because the only thing I could ever take from most of these discussions was that [the student interns] stood in front of scanners, scanning documents for a full weekend; and I just – I guess I made an unconscious leap then and assumed that they had scanned everything."


The Money Shot: Withholding Disclosure of Hard Drive Containing ESI Metadata

Something more significant than Berringer's "we screwed up" defensive posture (actual testimony excerpt) was his "acknowledgement that he did not disclose the existence of the Target Hard Drive containing the ESI in native format during the negotiations with Lexington's counsel."

The Court wasn't into buying the "screw-up" argument:

"Berringer was evasive and dissembling when asked to explain why Reed Smith did not simply produce the metadata in the Introspect database associated with the TIFF images when it produced the March 14 and April 30 Discs."

It was also clear that there was an easy way to comply with Defendant's RPD's, and at minimum, that meant to produce the TIFF images in searchable fashion together with the associated metadata:

"Berringer also knew that the Introspect database was searchable by fields that contained metadata such as name, date, subject matter, to, from, and CC. Id. at 278-79, 305-06. Berringer testified, 'I know that the fields that we told them [the Introspect database] had were to, from, date, re line, if there was one, cc’s, bcc’s.'). Id. at 304-05 (emphasis added). Berringer identified a letter in which Reed Smith offered 'to produce load files containing certain metadata fields for the e-mails produced' that included, but were not limited to, those set forth in the letter. Id. at 313. Thus, there was no need to search the ESI in native format before determining the scope of the metadata in the Introspect database, and no need to conduct a privilege review of the ESI in native format. Rather, B&G and Reed Smith could easily have produced for each TIFF image on the March 14 and April 30 Discs a corresponding load file containing the metadata for each image as stored in the Introspect database."

The Court then determined that the evidence supported a finding that B&G has (at least as of March 4, 2009) still not disclosed all the metadata in the Introspect database.

Now, on to the Court's analysis:


eDiscovery Violations Analysis

Waiver of Objection to Form of ESI Production Results in Fed. R. Civ. P. Rule 34

Although the Court found that the parties complied with the Fed. R. Civ. P. Rule 26f) meet and confer, even though they did not reach an agreement. The Court then provides an analysis of Fed. R.Civ. P. Rule 34 requestor's option to designate format of production of ESI. In particular, the Court notes, defendant Lexington specified the form of production -- "in native form without deletion or alteration of metadata." Relying on Rule 37a)(3)(B)(iv), the Court found that plaintiff B&G waived its objections to defendant Lexington's RFP because it failed to support the objections in a response to the Renewed Motion to Compel.


Plaintiff B&G's Violation of April 11, 2008 Order

On April 11, 2008 Order, the Court ordered B&G to produce by April 30, 2008 "all responsive documents in its possession, custody or control to the extent requested in the Renewed Motion to Compel. The Court found that B&G could have produced responsive ESI by that deadline. That B&G (or its counsel) had in its possession, but chose not to produce, the Target Hard Drive that contained what would have been documents responsive to the request, the Court found that B&G violated the April 11, 2008 order by "failing to produce ESI in the specified form.


Available Sanctions Discover Violations Sanctions Under Fed. R. Civ. P. Rule 37

The Court then provides a short analysis of possible sanctions for violations of a discovery order pursuant to Fed. R. Civ. P. Rule 37(b):

"(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing
designated claims or defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination."


Fed. R. Civ. P. Rule 37 Sanctions Applicable to Party, Its Counsel, or Both

The Court goes on to describe the "instead of" or "in addition to" language of Rule 37(b)(2)(C), where in essence, sanctions for discovery violations may be imposed against a party, the party's advising attorney, or both, and that sanctions may include attorneys fees caused by the failure.

The Court then states that under 11th Circuit decisional precedent, a motion for sanctions under Rule 37 may include both a party and his attorney, and that a court also has the double option of holding either the party, the attorney, or both responsible:

"'[A] motion for sanctions under Rule 37, even one which names only a party, places both that party and its attorney on notice that the court may assess sanctions against either or both unless they provide the court with a substantial justification for their conduct.' Devaney v. Continental Am. Ins. Co., 989 F.2d 1154, 1160 (11th Cir. 1993)."


No Bad Faith or Willfulness Required for Imposition of Discovery Violation Sanctions

The Court then notes that Rule 37 sanctions do not require a finding of either willfulness or bad faith by the party or its counsel, relying again on the 11th Circuit's decision in Devany v Continental Am. Ins. Co., supra.


Court's Inherent Power to Sanction

Magistrate Judge Spaulding also notes that the Court, pursuant to Supreme Court and 11th Circuit authority, has inherent power to sanction for discovery violations:

"Courts have the discretion to sanction conduct that abuses the judicial process even if procedural rules exist that govern the same conduct. Chambers v. NASCO, Inc., 501 U.S. 32, 44-45, 48-49 (1991). In fashioning appropriate sanctions, courts have the inherent power to impose sanctions on parties, lawyers, or both. In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir. 2006). The court may tax attorney’s fees and costs "when either has acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Byrne v. Nezhat, 261 F.3d 1075, 1106 (11th Cir. 2001)"


Court's Inherent Power to Sanction Non-Parties for Bad Faith Discovery Violations

In what appears to be a decision of first impression for the Middle District of Florida, the Court adopts the reasoning of a decision from the U.S. District Court of the Eastern District of Michigan in finding that non-parties may be subject to inherent power sanctions imposition for bad faith discovery violations:

"The court’s inherent power also includes sanctioning non-parties for bad faith conduct. See generally Chambers, 501 U.S. at 43; see also Helmac Prods. Corp. v. Roth (Plastics) Corp., 150 F.R.D. 563, 564-67 (E.D. Mich. 1993) (citing Chambers as authority to sanction non-parties). The
sanctioning of non-parties requires additional safeguards. I find persuasive the decision in Helmac Products that a non-party must "(1) have a substantial interest in the outcome of the litigation and (2) substantially participate in the proceedings in which he interfered." Helmac Prods. Corp.,
150 F.R.D. at 568."


No Substantial Justification Shown

The Court notes that the Supreme Court imposes a negative pre-condition (no substantial justification) prior to permitting the imposition of a sanction for discovery violations under a Court's inherent power:

""The Supreme Court has clarified that an individual’s discovery conduct should be found ‘substantially justified’ under Rule 37 if it is a response to a ‘genuine dispute, or if reasonable people could differ as to the appropriateness of the contested action.’" Devaney, 989 F.3d at 1163 (quoting Pierce v. Underwood, 487 U.S. 552, 565 (1988) (citations omitted))."


B&G's "Substantial Justification" Arguments

Three were asserted:

(1) B&G’s response to Lexington’s RFPs referred to an agreement to produce scanned copies of documents;
(2) Lexington delayed in objecting to the form of production of ESI; and,
(3) B&G was entitled to produce ESI as maintained in the usual course of its business and in reasonably usable form." [citations omitted]

Magistrate Judge Spaulding's analysis:

(1) The evidence established that the agreement among counsel related only to documents that were maintained in paper form. B&G did not produce all documents as scanned copies: "Rather, B&G's attorneys manipulated ESI to convert the searchable text to a TIFF image stripped of metadata." The Court found these facts to "undermine" B&G's assertions of justifiable reliance.

(2) Lexington's Delay in Objecting to B&G's failure "might carry some weight if B&G had produced ESI in a form permitted by Rule 34 at the outset. It didn't, and the Court again found no evidence of "justifiable reliance."

(3) Magistrate Judge Spaulding provides incisive comments about "maintained in the usual course of its business" --- Put succinctly, the Court found that it was not TIFF images that was maintained by B&G in usual course of its business." In fact, the argument was apparently made that the ESI, together with its associated metadata was what *was* maintained in B&G's ordinary course of business. Relying on the Federal Rules Advisory Committee notes to Rule 34, the Court also found that B&G's deletion of metadata from its discovery response "significantly degraded Lexington’s ability to search the ESI and, accordingly, that it was not in a reasonably usable form as required by Rule 34." Once again, B&G's "substantial justification" argument fell on deaf ears.


Out of Circuit Case Law Permitting Non-Production of ESI Metadata on Basis of Substantial Justification Rejected

B&G cited three cases in support of its assertion that it was "substantially justified in not producing ESI in native data format with associated metadata," and, notwithstanding the Court's finding them non-binding, rejects them each in turn as non-supportive of plaintiff's position:

Kentucky Speedway, LLC v. NASCAR, Inc., Civ. Action No. 05-138-WOB, 2006 WL 5097354 (E.D. Ky. Dec. 18, 2006) -- The Court notes that in this case, the movant did not specifically request the manner in which ESI should be produced, and that, on the facts of that case, that Court noted that the belated request was not warranted.

Michigan First Credit Union v. Cumis Ins. Soc’y, Inc., No. 05-74423, 2007 WL 4098213 (E.D. Mich. Nov. 16, 2007) --- In this case, the defendant objected to the format of production (native format data, with associated metadata). Judge Spaulding again notes that B&G never objected to the format of production specified by defendant Lexington.

In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig. ("In re Payment Card"), No. MD 05-1720(JG)(JO), 2007 WL 121426 (E.D.N.Y. Jan. 12, 2007). In this case, the requests were served (and responses produced) before the effective date of the amended Rule 34. In that case, even though defendant's had failed to object, the Court found it would "not be fair to impose the costs of reproduction of the ESI on the individual plaintiffs," but warned them that future production would likely require them to reproduce any ESI that was produced in a form that was reasonably usable. Rather than support plaintiff B&G's position, the Mag. Judge Spaulding finds here that "Accordingly, B&G’s knowledge of the decision in In re Payment Card provides additional support for the finding that the form in which it produced ESI to Lexington was not substantially justified"


The Impax Labs Decision Footnote

Footnotes are typically at least as instructive (if not more so) as opinion text in the main. Footnote 25 tells all:

"B&G cited Wyeth v. Impax Labs., Inc., 248 F.R.D. 169 (D. Del. 2006) for the proposition that when counsel do not agree on the form of production of ESI, a party is not required to produce ESI in native format." The Wyeth court’s decision was based on local discovery standards that directed parties to produce ESI as image files if they could not agree on a different form of \production. Id. at * 4-5. This Court does not have local discovery standards that establish the default form of production of ESI in the absence of agreement of the parties."

Author's Note: What is interesting is whether, in Delaware, a challenge to the local rules (as contradicting, or limiting, the Federal Rules) might be asserted.

Ok, back to Judge Spaulding's decision.

In a showng of impeccable logic, Magistrate Judge Spaulding also disposes of any remaining "substantial justification" arguments:

"Most telling, if B&G and its attorneys believed the form in which they produced ESI was substantially justified, there was no reason for them to conceal information and make material misrepresentations about the way ESI was collected and the form in which it was kept in the Introspect database."

" Instead, Reed Smith and its attorneys went to great length to fabricate explanations about why they could not produce ESI. In response to the April 11 Order, they asserted the costs and burden B&G would incur in producing ESI without disclosing to the Court and the parties that ESI with associated metadata was readily available in the Introspect database."


Deliberate or Reckless Disregard of Truth Does Not Provide Substantial Justification

This may not really require much explanation, but again, the Court was not sparing in its criticism of B&B's counsel's discovery conduct:

"During the December 8, 2008, hearing, counsel for Reed Smith still argued that production of ESI in native format would have been unduly burdensome because the privilege review had not been conducted of the ESI on the Target Hard Drive. In making this argument, counsel ignored the evidence that a privilege review had been done in the Introspect database, and that the metadata associated with the TIFF images on the March 14 and April 30 Discs could be produced from the Introspect database."

The Court's take: "Such deliberate or reckless disregard of the truth can never provide substantial justification under Rule 37."

Accordingly, B&G and its counsel have not established that their production of ESI and their response to the April 11 Order were substantially justified.


Sanctions for eDiscovery Violations Imposed

First, a finding of prejudice to defendant Lexington as requesting party:

"Lexington has been prejudiced by

(1) being unable to complete discovery after receiving ESI in a form that was not reasonably usable;

(2) incurring additional expense in using ESI that was produced in a form that limited its ability to search it; and,

(3) incurring attorney’s fees, costs, and litigation expenses in establishing that ESI had not been properly produced."

Perhaps most tellingly, B&G's discovery violations were ongoing:

"The interim relief that I granted resulted in production of the Logix Systems Hard Drive and B&G Hard Drive, but B&G still has not produced all specified ESI in reasonably usable form."

Result:

(1) Order directing Plaintiff B&G to produce (again): "Accordingly, B&G shall provide to Lexington the Introspect database, except for information already segregated as privileged or protected. B&G shall bear all costs related to this production, including purchasing software or paying license fees for Lexington’s use of the database software, and hiring professionals to copy the database, if necessary. Lexington may elect the form or forms in which it wishes the production of the Introspect database to be made – it may ask for a copy of the Introspect database, remote access to the database, or both."

(2) To ensure B&G's compliance, the Court also ordered it to provide a computer expert selected by Defendant with direct access to the Introspect database maintained by Reed Smith, so that "the expert can confirm that all information loaded into the Introspect database (except for privileged or
otherwise protected information) has been produced to Lexington.

(3) Discovery reopened as to Defendant for 60 days.


No Sanctions Against In House Counsel

The Court gave B&G's in house counsel (who was not an attorney advising B&G during the pertinent time period) a pass, and a strict warning:

"DelValle entered the case in May 2008 and became local counsel for B&G in June 2008. I credit his testimony that he did not participate in the production of ESI until after my June 25 Order requiring reproduction of ESI. Accordingly, I find that he was not an attorney advising B&G with respect to the production of ESI in March and April 2008. I remind DelValle, however, that blindly relying on outside counsel falls short of the duty he has as an officer of the court, as counsel of record, and as an advocate for his client."


Sanctions Against B&G's Outside Co-Lead Counsel

Sanctions Against Ellison: The Court first sets forth the discovery violation rules applicable to "advising attorneys" --

"Rule 37 provides that the party or the attorney advising the sanctionable conduct, or both, are subject to sanctions. Fed. R. Civ. P. 37(a)(5)(A), (b)(2)(C). The Eleventh Circuit has explained that "[t]he phrase ‘attorney advising such conduct’ does not . . . exclude . . . an attorney’s willful blindness . . . ; to the contrary, the phrase instructs that when an attorney advises a client in discovery matters, he assumes a responsibility for the professional disposition of that portion of a lawsuit and may be held accountable for positions taken or responses filed during that process." Devaney, 989 F.2d at 1161-62. In this respect, "[s]anctions exist, in part, to remind attorneys that service to their clients must coexist with their responsibilities toward the court, toward the law and toward their brethren at the bar.""

The Court then finds that Ellison to an "advising attorney" and finds him personally liable for sanctions:

"Ellison has been one of the lead counsel of record in this case since its inception. While he presented evidence that he was not involved in production of discovery before April 2008, the evidence shows that he began advising B&G regarding discovery before the April 30 Discs were produced."

"The improper production of ESI on the April 30 Discs and the discovery misconduct that followed was done under Ellison’s supervision, and necessitated the motion for sanctions and proceedings related thereto.

The Court's ruling: "As such, Ellison was "an attorney advising" B&G regarding the discovery misconduct, and he is personally liable for Rule 37 sanctions."

It bears mentioning that Ellison's argument that "his local counsel was in charge of the production of the April 30 Discs" fell on deaf ears: It did not relieve him from personal liability "because counsel of record may not avoid sanctions for his own conduct on the basis that another attorney was advising the client regarding the discovery matter at issue. Citing 11th Circuit precedent in Stuart I. Levin & Assocs., P.A. v. Rogers, 156 F.3d 1135 (11th Cir. 1998), Magistrate Judge Spaulding notes that in that case :

"The [11th Circuit] observed that while Levin "may have delegated some of these duties to his associate, such a delegation-while it may provide a ground for sanctioning [his associate]-did not relieve Levin of his own duties." Id. The Eleventh Circuit noted that "[a]s counsel of record, Levin
owed a duty to his client fully to represent his interests, and he owed a duty to the court to comply with the court’s orders." Id. Accordingly, the Eleventh Circuit found that the district court had not abused its discretion in imposing Rule 37 sanctions against Levin."

Magistrate Judge Spaulding's ruling:: "As in Levin, because Ellison’s own conduct was not substantially justified, he is subject to sanctions under Rule 37 and shall pay the reasonable attorney’s fees, costs, and expenses Lexington incurred in filing the motion for sanctions and in the matters arising therefrom. These costs include the fees and expenses of expert witness Teshima. In addition, Ellison shall pay the Court’s court reporter, Diane Peede, for the cost of transcribing the December 8, 2008, hearing on the motion for sanctions. "


Sanctions Against Plaintiff's Counsel and Plaintiff's Counsel's Firm

Magistrate Judge Spaulding also finds Plaintiff's counsel's law firm responsible for the discovery abuse of its attorneys:

"Reed Smith, through its partners and associate attorneys, was also responsible for the discovery misconduct."

The Court singled out Reed Smith, and Reed Smith attorney Berringer for his behavior:

"The evidence establishes that Reed Smith, particularly through its partners Ellison and Berringer, acted in bad faith with respect to the events that occurred after Lexington objected in May 2008 to the form of B&G’s production of ESI. Specifically, Berringer falsely told opposing counsel that B&G had caused all of its ESI to be printed and scanned to support the position that B&G could not produce metadata or text searchable documents. He made no reasonable effort to determine whether the story he told was true – such as looking at the information in the Introspect database or asking AKO."

"Counsel for Lexington and the Court were deceived by Berringer’s deliberate fabrication, and it resulted in a significant waste of resources for Lexington and the Court. Berringer finally disclosed to Lexington’s counsel on the eve of the June 25, 2008, hearing that B&G’s ESI had been obtained in electronic form and transferred to the Introspect database, but that disclosure remained deceptive and incomplete. He did not disclose what metadata the Introspect database contained or the extent to which the ESI therein had full text search capacity. He did not reveal, until after Teshima testified at the June 25 hearing, that B&G possessed the Target Hard Drive on which the ESI in native format was stored."

Berringer received additional excoriating attention from the Court:

"Berringer continued this pattern of deliberate misrepresentation through willful blindness in his testimony at the December 2008 hearing. He testified about the metadata on the Introspect
database, even though he never examined the database to determine what it contained. He was evasive about why B&G did not simply disclose the metadata on that database before the hearing.
Berringer and Ellison also made material misrepresentations to the Court about the reason they did not produce the metadata from the Introspect database to resolve the production problems. Both of them repeatedly told the Court that AKO had been asked to provide necessary information, but refused to do so. Instead, as the evidence established, throughout the relevant period, AKO made the Introspect database remotely accessible without restrictions to Reed Smith"


Order Imposing Sanctions Against B&G's Outside Counsel and Counsel's Firm, cont'd

"The totality of this conduct establishes that Reed Smith’s actions in this regard were deliberately designed to impede Lexington’s ability to discover and reasonably use ESI maintained by B&G. This bad faith conduct disrupted and delayed the discovery process and caused significant prejudice to Lexington. The bad faith conduct also unreasonably multiplied the proceedings in this case."

Magistrate Judge Spauldings' Ruling: "Accordingly, pursuant to Rule 37 and the Court’s inherent power, I find that Reed Smith is jointly and severally liable with Ellison to pay the reasonable attorney’s fees, costs, and expenses Lexington has incurred in filing the motion for sanctions and in the proceedings related thereto. These costs include the fees and expenses of expert witness Teshima, whose testimony was essential to uncovering the misrepresentations made regarding
ESI. Reed Smith is also jointly and severally liable with Ellison to reimburse the Court’s court reporter for the cost of transcribing the December 8, 2008, hearing on the motion for sanctions. "

"Finally, I will issue an order to show cause why John Berringer Esq., should not also be personally sanctioned for his conduct in this case."

I expect that this decision will be appealed first to the District Judge, and then, perhaps, to the 11th Circuit. That said, the standards for review (and reversal) are either abuse of discretion or clear error...

Stay tuned.

SWT

2009-03-05 8th and 10th Circuit Spoliation, Accessibility, Expedited Motion to Compel Imaging

Another week, and you guessed, it a spate of spoliation decisions: One from the 8th Circuit and a second from the District of Colorado (relying on 10th Circuit). Also, an "accessibility" decision (with a twist) from the Eastern District of Virginia, an expedited motion to compel imaging from the Southern District of Florida, and a Maryland Court of Appeals decision permitting the discovery of the identity of anonymous "internet communicants"

SWT

**************
Case: Insignia Systems, Inc. v News America Marketing In-Store
Citation: 2009 WL 483850 (D. Minn. 2009)
Date: 2009-02-25
Topics: Eighth Circuit spoliation standards, non-party destruction, ESI destruction by non-party during pendency of litigation

In this spoliation decision from the U.S. Court of Appeals for the 8th Circuit, defendant claimed that plaintiff had instructed a consultant preparing an "Investment Thesis" equity report to destroy all information used to prepare the report that was received by that third party. The consultant testified that it has destroyed all computer files in accordance with instructions for payment from plaintiff. Defendant then claimed that the non-party consultant’s testimony in connection with the preparation of the Investment Thesis was substantially compromised by the non-party’s destruction of all collateral materials (including, apparently, even the contract of engagement with plaintiff).


Eighth Circuit Spoliation Standards

The Court first turns to the traditional definition from Black’s Law Dictionary: "Spoliation is defined as the "intentional destruction, mutilation, alteration, or concealment of evidence"

The Court next articulates standards to establish spoliation for the 8th Circuit --- which, imo, appears to be a "pure" Federal common law position, which in turn means (at least imo) a universal approach to spoliation by all District Courts within the Circuit (compare 11th Circuit’s "advised" by state law principles approach, yielding potentially conflicting intra-circuit decisions). In requiring a finding actual intent, the Eighth Circuit appears to eschew the ordinary negligence standards adopted by the 2nd and other circuits.

"There must be a finding of intentional destruction indicating a desire to suppress the truth before an adverse inference instruction is justified. Morris v. Union Pac. R.R., 373 F.3d 896, 901 (8th Cir.2004)(emphasis added). A spoliation sanction requires a finding of "intentional destruction of evidence indicating a desire to suppress the truth, not the prospect of litigation." Greyhound Lines, Inc. v. Wade, 485 F.3d 1032, 1035 (8th Cir.2007)(citing Morris, 373 F.3d at 901). A court may rely upon inferences to find requisite intent on behalf of the spoliator to destroy the evidence and suppress the truth. Morris, 373 F.3d at 902."


Intentionality, Purposefulness and Obscuring the Truth

The spoliation bar set by the Eighth Circuit is set fairly high: The court notes that the "intentionality must be purposeful" and that the "purpose of the destruction must serve is the obscuring of truth."


Prejudice

The Court then goes on to state that intent must be combined with a finding of prejudice:
"Intent is rarely proved by direct evidence, and a district court has substantial leeway to determine intent through consideration of circumstantial evidence, witness credibility, motives of the witnesses in a particular case, and other factors." Id. at 901.Second, there must be a finding of prejudice to the opposing party before imposing a sanction for destruction of evidence. Dillon v. Nissan Motor Co., Ltd., 986 F.2d 263, 267 (8th Cir.1993)."


ESI Destruction During Litigation

Defendant also claimed (and it was admitted by plaintiff) that the plaintiff had instructed the non-party to destroy its ESI after litigation with plaintiff had commenced. The Court found that although the ESI was destroyed during after litigation had commenced, the Court:

"…did not find that the record shows that documents were destroyed as a result of any ongoing or anticipated litigation. As Insignia points out, "There is no reference in the Diracles letter to the litigation with News America, or any other litigation.""


Indication or Reasonable Inference for Motive to Destroy

Well, they were admitted destroyed after litigation had commenced, so whither this finding? The Court found that the record supported no indication or reasonable inference suggesting the report was prepared and destroyed due to pending litigation.

"Additionally, the Court is not persuaded by NAM's argument that CIRG's services were connected to this litigation through the discussions Insignia's Board had on these topics. See Defs.' Mem. 13. Upon review of both the Board meeting minutes from March 17, 2005 (Ex. C), and May 18, 2005 (Ex. F), the Court would note that both the CIRG report and the case in front of this Court were discussed, however, the Court holds there is no indication or reasonable inference that can be drawn from these meeting minutes that suggests the report was prepared and thereafter ordered to be destroyed due to the pending litigation."

Of course, without reference to the destroyed information that would be a difficult call, but the Court was apparently satisfied that no circumstantial evidence satisfying the intent-suppression-obscuring 8th Circuit spoliation standards.


No Prejudice Where Other Sources of Destroyed Documents Exist

The Court noted that the ESI was available to the defendant, as plaintiff had instructed the non-party to destroy the "copies" of what it had received, implying of course, that other copies (or originals) still existed under plaintiff’s custody or control.

Result: Defendant’s motion for adverse inference was denied.


***************
Case: Smith v. Slifer Smith & Frampton/Vail Associates Real Estate, LLC
Citation: 2009 WL 482603 (D. Colo. 2009)
Date: 2009-02-25
Topics: 10th Circuit Spoliation standards require bad faith destruction of relevant evidence, standard of review in U.S. Magistrate Judge’s Report and Recommendation is clear error and abuse of discretion, counsel’s letter of "investigation" of transaction triggered duty to preserve, use of secure wiping programs

In this decision from the U.S. District Court for the District of Colorado, U.S. District Judge Kane reviewed and approved the U.S. Magistrate Judge’s report and recommendation on plaintiff’s "Motion for Sanctions for Destruction of Evidence." In this case plaintiff’s counsel sent defendant a letter of inquiry and investigation in connection with a real estate transaction on May 19th 2006, and that May 19th 2006 (a date nearly six months prior to onset of litigation) was deemed to have triggered defendant’s duty to preserve. What follows is the timeline of what transpired after the action was commenced:

April 9, 2007 – Plaintiffs serve request for document production("RPD"); definition of "document" included:

""…computer data, including floppy disks, hard drives, tapes and other electronic media ... e-mails and any and all forms of communication communicating, preserving, recording and transmitting human thoughts whether written, printed, typeset or reproduced by any other means, which is now or formerly was in your possession.""

July 30, 2007 – Plaintiff serve second RPD, again asking for documents, including ESI, but also requesting inspection and sampling of a defendant’s Computers and…

"those databases identified in discovery in this case, including any email databases, any information or personal information management or similar program databases, and any backup tapes or databases."

October 15, 2007 – Defendants respond to RPDs and provide, inter alia, a CD containing a Forensic Toolkit ("FTK") report provided by defendant’s technical expert.

November 1, 2007 - "…included in a letter from defense counsel on November 1, 2007, was a description of the sources searched for ESI, which included four media drives residing on three of [defendant] Seibert's computers: SSF 1-2 and SSF 1-5 were two drives from Seiberts "Old Office PC," SSF 1-4 was from Seibert's "Home Computer," and another came from Seibert's laptop computer, SSF 1-1."

Defendants then disclosed that there were additional sources of potentially relevant information on one or more of one defendant principal’s other computers:

"included in a letter from defense counsel on November 1, 2007, was a description of the sources searched for ESI, which included four media drives residing on three of Seibert's computers: SSF 1-2 and SSF 1-5 were two drives from Seiberts "Old Office PC," SSF 1-4 was from Seibert's "Home Computer," and another came from Seibert's laptop computer, SSF 1-1"


Use of Wiping Utility During Pendency of Litigation

The facts then become a bit more intriguing: defendant had installed a wiping utility on his computers. There is almost always an "oops" in spoliation challenges --- this "oops" is a whopper. First, the tee-up: A wiping utility was admittedly installed on defendant’s computer

"[T]he parties do not dispute that Anti Tracks software was found on Seibert's home computer (SSF 1-4) and that the drive labeled SSF 1-2, Seibert's Old Office PCDisk 1, was not functional (See Docket No. 92 at 60)"

'Th[e] defendants' expert, Raphael Gorgal, stated in his report dated July 7, 2008, that the four systems were analyzed "to determine if secure deletion (wiping) software had been installed." (Docket No. 74-25 at 6). Gorgal found that "the executable files of a wiping program called Anti tracks" was on SSF-1-4, the home computer. He stated that the program's "advertised capabilities include the ability to automatically ‘erase recent document history, erase Windows temp, erase run history, erase search files history, erase search computers history, erase last logon history, erase network cache, erase telnet history, erase recycle bin, erase registry streams, and clear the Windows page file.’ It also offers the ability to securely delete information." (Docket No. 74-25 at 6). In addition, he reported that "[f]iles associated with the application were discovered on the drive image and have last accessed dates of 9/6/2007..." (Docket No. 74-25 at 6) (emphasis added)."

Why this turns out to be a whopper:

"[Defendant’s expert] further stated regarding orphaned files and folders: "9383 files and folders from the period 9/6/07 through 9/14/07, as identified by Last Accessed Date were found. These include default Windows folders including Program Files, Documents and Settings, registry entries, downloaded music from iTunes, and content from the Temporary Internet Files Folder. Two of the orphaned files are Outlook. pst files. Both .PSTs were included in the original data set of searched active files. Both are corrupt, and neither contains any whole recoverable mail data, even after being repaired using industry standard repair tools, however, can be searched via keyword." (Docket No. 74-25 at 9) (emphasis added). He also stated, "SSF-1-4 is missing key components of the registry; and of those intact, some key areas are missing. Thus, a specific/comprehensive analysis of user activity was therefore not possible. In its current state, the imaged computer (SSF-1-4) could not boot into Windows, and the Documents and Settings folder, the Program Files folder, and Recycler are empty...."
(Docket No. 74-25 at 10)"

It gets worse (for defendants):

"[A]n Anti-Tracks folder was created on August 17, 2006, which was after the May 19, 2006, letter from attorney Wendell Porterfield to defendant Seibert (Docket No. 74-2; Pls.' Ex. 1);"
"That the last-accessed date of September 6, 2007, was also after the May 19, 2006, letter from attorney Porterfield to Seibert; after the commencement of this action on November 2, 2006 (Docket No. 1); after the entry of the original Scheduling Order in this matter (Docket No. 12); after service of the plaintiffs' first RFP to Seibert and SSF on April 9, 2007 (Docket Nos. 74-4 and 74-5); after service of the plaintiffs' second set of RFP to defendants on July 30, 2007, which included RFPs for production of ESI (Docket No. 74-8), and just two days after responses were
served by defendants to that second set of RFP (Docket No. 74-9);"

"That moreover the last-accessed date of September 6, 2007, was just eight days before defendants created a forensic bit-stream image from the computer on September 14, 2007, from which defendants' expert found 9383 orphaned files and folders from the period 9/6/07 through 9/14/07, which was days before and on the date the forensic image was created"

"[F]ollowing the production of the defendants' expert report, which was produced after a motion to compel production of certain ESI (Docket No. 66) was filed by plaintiffs, the parties filed a Joint Motion to Amend the Scheduling and Discovery Order (Docket No. 72). In that motion, the parties, through counsel, stated, inter alia, "Material Facts. Subsequent to the filing of the Motion to Compel, Defendants endorsed and disclosed a report from their computer forensic expert, Raphael Gorgal, showing the presence of wiping or secure deletion software called ‘Anti Tracks' on and the deletion of a significant number of files from a computer drive owned by Defendant Seibert which had been subject to discovery in this case." (Docket No. 72 at 2, ¶ 3) (emphasis added)"


Wiping Utility Usage During Pendency of Litigation, Cont'd

Defendant's situation keeps worsening – keep in mind that all these activities occurred during the discovery period:

"[P]ursuant to that Order, plaintiff's expert, David Penrod, submitted a report in which he states that the Anti-Tracks folder "was created on August 17, 2006 at 11:11 AM. It was deleted on September 13, 2007 at 12:13 AM, just days before Mr. Gorgal [defendants' expert] created a forensic bit-stream image from it." (Docket No. 74-28 at 4, ¶ 8). Penrod recovered three "Internet shortcut files that link to Internet websites from which Anti-Tracks can be downloaded and information about its function obtained." (Docket No. 74-28 at 4, ¶ 12). All three "were created on August 17, 2006 at 11:11 AM.... They were deleted on September 6, 2007 at 7:44 AM. They were Modified on August 4, 2007. The exact cause of this modification is unknown, but may have been caused by a visit to the Anti Tracks website on the Internet." (Docket No. 74-28 at 5, ¶ 12)"

"[P]enrod further states, inter alia, in his affidavit with regard to Seibert's home PC (SSF 1-4) that Penrod recovered evidence of secure data deletion (file wiping) on SSF 1-4, EnCase includes a utility that searches a drive image for successive, uninterrupted sectors containing well known file wiping patterns. Consecutive sectors containing such patterns were recovered during this search..."

"The EnCase forensic program automatically recovered a total of 67,714 folders, files and individual system data streams as Lost Files. The Affiant analyzed the date and time stamps of these objects and determined that they had been deleted as part of a systemic effort to erase pertinent data. The erasures started on May 4, 2007 at 1:16 AM and continued every day until 11:02 AM on September 14, 2007, just before the entire operating system and its component parts was erased. Most of the erasures have the appearance of automated processes; many of those in August and September 2007, however, appear to be manual in nature..."


Good Wipe, Bad Timing

The Court notes (by way of the Magistrate Judge’s findings) that the wiping utility did serious impaired any forensic efforts:

"Files and objects deleted include but are not limited to hives and individual keys of the Windows Registry stored within System Restore Points, files and folders from the Documents and Settings directory, including Outlook PST files, and operating system data from the Windows directory.
While all these deletions seriously damage forensic recovery of evidence, no deletions are more damaging than those of the Windows Registry stored within the System Restore Points. Deletion of Restore Point files obliterates historical records that can be used by the forensic analyst to construct a chronology of system and user activity...."


A What-Never-to-Do (but was done) During Pendency of Litigation

Think things could get any worse for defendant? Think again. When a forensic examiner states "These files are no longer present" things aren’t looking up:

"The Affiant's analysis of EnCase's Lost Files bin revealed that two (2) Microsoft Outlook PST files had been deleted and corrupted. The Outlook PST files were both created on June 27, 2005. The principal file (Outlook.PST) was deleted on August 3, 2007. The secondary file
(OutlookHotmail-00000002.PST) was deleted on July 20, 2007...."

"The Affiant's analysis of EnCase's Lost Files bin revealed that approximately 9,500 files and folders, including critical system files, had been deleted between September 6 and 14, 2007. These files included the contents of the principal Windows operating system directories, containing critical files necessary for booting and running Windows. The contents of the following folders were deleted: Documents and Settings, Program Files, System Volume Information and Windows.... Documents and Settings contains User Profiles for each user with a registered logon to the computer. It also contains user created files, such as Word documents, digital photographs and email messages as well as other files such as the user's Internet History, Cache and Cookie files. This is a critical folder for forensics. It is completely empty.... "

"The System Volume Information directory contains several onboard services necessary for the efficient performance and restoration of the Windows operating system. This directory is part of System restore, a tool that allows the user to set points in time to which he or she can roll back the computer. The System Volume Information folder contains these points and associated information that makes them accessible. This is a critical folder for forensics as it contains a history of the computer that can be recovered by forensic tools. This folder is completely empty.... The Windows directory contains the Windows operating system files. Most importantly, it contains the Windows Directory, which is a central repository for all information about the operating system and its installed software and hardware components. The Windows Directory also contains event logs, which provide a chronological record of application, system, security and user events. Both the Registry and event logs are critical to effective forensic analysis."


The forensics piece de resistance:

"These files are no longer present."


Rebuttal Expert Testimony, Wiping Patterns, and the Battle of Experts

Defendant then called in a rebuttal expert to refute the findings of plaintiff’s expert.
"[P]ursuant to Judge Kane's Order of July 18, 2008 (Docket No. 73), defendants' rebuttal expert, David Cowan (Mr. Gorgal's coworker), submitted a rebuttal report dated August 21, 2008. (Docket No. 92-15, Defs.' Ex. N). Cowan does not agree with certain conclusions stated in Penrod's report."

"Cowan opines that EnCase script does not do what Penrod claims and that "[i]n fact, nowhere in the script source code does it reference, identify or test any ‘well known wiping patterns'." (Docket No. 92-15 at 4-5). Cowan further states that "CFL [Penrod's firm] is basing their technical argument that wiping occurred [sic] on SSF-1-4 and SSF1-2 on the consecutive sector script which does not operate as has been described in Mr. Penrod's report and does not in my opinion show that this or any drive has been wiped.""


And Make Sure that We Provide Another Explanation For What Appears to Be Reformatting

A second rebuttal expert’s report was provided by defendant, who apparently marched as ordered. What’s interesting is that the new expert’s rebuttal report did not rebut plaintiff’s expert report; rather it stated only that it could not be determined that the wiping patterns were the result of reformatting:

"[A]ttached to defendants' response to the instant motion is a new expert report from L. Aaron Phillipp of Navigent Consulting, Inc., responding to Penrod's opinion that the defendants intentionally reformatted the data drive labeled SSF 1-2 (Seibert's old office PC-disk 2) in an effort to prevent the plaintiffs from acquiring evidence against the defendants. (Docket No. 92-16, Defs.' Ex. O)."

"Phillipp concludes that he did not identify any evidence to support Mr. Penrod's assertion that Mr. Slifer's [sic] work computer was reformatted. As detailed in this report, in all cases on the SSF 1-2 hard drive, the markers which are a direct and inevitable result of formatting were either missing or damaged. In short, none of the artifacts which would indicate a proper or attempted reformatting had occurred could be identified. Rather, the state of the drive would indicate some kind of catastrophic failure, either caused by older hardware which was nearing the end of its life or some type of malware."

The Court wasn’t buying for two reasons:

The new expert’s rebuttal report was first not considered on procedural grounds. Nonetheless, and I am seeing more often in such decisions, the Magistrate Judge considers the report anyway, and considers it as having been rebutted nonetheless (to be clear, a rebuttal of a rebuttal of an expert report):

"Defendants have not provided any explanation for why a new expert report was suddenly submitted with their response. There has been no showing that the failure to submit Phillip's report in a timely manner was substantially justified or is harmless. Therefore, such report should not be considered in conjunction with the motion now at issue;

"[E]ven if Phillipp's report should be considered, the conclusion stated therein is rebutted by Penrod's subsequent declaration submitted by plaintiffs with their reply. (Docket No. 106-2). Furthermore, as correctly noted by plaintiffs in their reply, Penrod and Phillipps agree that all of the data on the old office PC was destroyed after May 10, 2007. Such loss of data could have been avoided if the data had been timely preserved by defendants. In addition, in his declaration, Penrod also methodically rebuts Cowan's August 21, 2008, report and conclusions and identifies purported misstatements in defendants' response concerning Penrod's conclusions"

"Seibert's August 22, 2008, deposition testimony (Docket No. 74-34) includes the following. His old office PC came from his brother in 2003 (Seibert Transcript at 17:4-7, 18:1) and remained at Seibert's office until October 2007 (20:4-10, 36:15-18). He was out of town for about 17 days in September 2007, and while he was gone, copies were made of the computer drives. (21:14-25-22:4). It was the primary computer he used for his work from 2003 through the summer of 2005 at which time he started using his lap top computer. (43:23-25; 44:1). After the summer of 2005, he still had that desktop PC in his office and turned it on from time to time if he was looking for a file that he could not find in his lap top computer. (44:8-13). There was no other place he kept electronic information relating to his work from the summer of 2003 through the summer of 2005. The information from his work related to this case was contained on that computer. (54:4-12)."

Of course, when other options run out, and one is backed into a corner, the next logical course of action is abject denial, or a plea of ingorance:

"Seibert does not know how the destruction of data on the computer occurred.(49:20-22, 50:12-15)." "He denies deleting or destroying any information from a computer since May 2006 that might related to this case. (17:18-22). He further denies installing, downloading, or using any wiping software on any computer. (59:18-20; 60:8-13). With regard to his home PC, from the time until it came into the house until September 2007, he had a habit of using it to check his SSF email. (71:4-9, 23-25; 72:1-8). He had access to that computer from September 6 to 8, 2007, at which time he went to Arizona. At that time his wife and two daughters were in the house, but they told him they have no knowledge about the Anti-Tracks software on the computer. (73:8-11; 75:15-18). He returned to Colorado on September 26 or 27, 2007.
(73:12-15). He does not know who installed the software, and he never used it. (75:18-23)"


10th Circuit Spoliation Standards

The U.S. Court of Appeals for the 10th Circuit is a "pure" Federal common law jurisdiction, and a successful spoliation requires a showing of intent and bad faith:

"[T]he general rule is that bad faith destruction of a document relevant to proof of an issue at trial gives rise to an inference that production of the document would have been unfavorable to the party responsible for its destruction." Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir.1997)."

"Mere negligence in losing or destroying records is not enough because it does not support an inference of consciousness of a weak case." Id."

"‘[B]ad faith’ is the antithesis of good faith and has been defined in the cases to be when a thing is done dishonestly and not merely negligently. It is also defined as that which imports a dishonest purpose and implies wrongdoing or some motive of self-interest." Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. at 635"


Suspect Timing Creates Supports Conclusion that Defendant (or agent) Wiped Drive

While there was no direct identifying who destroyed the ESI, the Court found that sufficient circumstantial evidence to conclude that it was either the defendant, or someone acting on his behalf:

"[T]here is no smoking gun establishing who caused the loss of data on the two computers, but the evidence strongly supports the conclusion that that person was defendant Seibert or someone acting on his behalf."

The Court also found sufficient evidence to support a finding of bad faith, intent, and prejudice to the non-spoliating party:

"Nevertheless, the court finds that the plaintiffs have shown by a preponderance of the evidence that after the duty to preserve the ESI on Seibert's computers arose, the defendants failed to preserve evidence and, in fact, destroyed it in bad faith and intended to prevent disclosure of relevant evidence on Seibert's computers."

"This finding is primarily based upon the highly-suspect timing of the usage of Anti-Tracks on Seibert's home PC and the timing of the destruction of the hard drive on Seibert's old office PC. The reformatting of that hard drive (SSF 1-2-the old office PC) occurred after May 10, 2007, which coincides with the date of Seibert's first deposition on May 11, 2007, and the day after he provided responses to the plaintiffs' first set of RFP. Moreover, the last access date of the Anti-Tracks on the home PC was in early September 2007 right before the drive was to be imaged by defendants' expert for purposes of producing ESI. The inference can, and has been drawn by this court, that the timing of the destruction indicates that whoever was responsible knew that the evidence discovered would very well reveal information defendants did not want revealed".

ESI Destruction Occurred Post Action Commencement, Triggering Violation Duty to Preserve

"Furthermore, the timing of such destruction was after the commencement of this action, at which time the parties had an obligation to preserve such evidence "


Strict Standard of Proof Rejected

Interestingly enough, the Court relies on the 2d Circuit’s decision in Residential Funding v DeGeorge, 306 F. 3d 99, (2d Cir. 2002) (a negligence standard case) in articulating a flexible standard of proof in spoliation proceedings.

"Courts must take care not to hold[ ] the prejudiced party to too strict a standard of proof regarding the likely contents of the destroyed [or unavailable] evidence, because doing so would subvert the purposes of the adverse inference, and would allow parties who have ... destroyed evidence to profit from that destruction." Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 109 (2d Cir.2002) (internal quotations omitted). "Where a party destroys evidence in bad faith, that bad faith alone is sufficient circumstantial evidence from which a reasonable fact finder could conclude that the missing evidence was unfavorable to that party.""

Egregious as defendant’s acts appear, the Court declined to impose terminating sanctions, and determined that under 8th Circuit standards, the imposition of an adverse inference instruction to the jury was a appropriate penalty:

"[W]hile the court finds that the destruction of evidence here was the result of willfulness and bad faith, upon consideration of the circumstances presented in the instant motion and the so-called " Ehrenhaus factors," FN3 the extreme, severe sanction of a dispositive sanction, namely, entry of default judgment (albeit tempting under the circumstances presented here) is not recommended. "Because dismissal with prejudice defeats altogether a litigant's right to access to the courts, it should be used as a weapon of last, rather than first, resort." Ehrenhaus v. Reynolds, 965 F.2d 916, 920 (10th Cir.1992) (internal quotation marks omitted). "Only when the aggravating factors outweigh the judicial system's strong predisposition to resolve cases on their merits is dismissal an appropriate sanction." Id. at 921…"


Tenth Circuit Standards For Terminating Sanctions

"FN3. 'Before choosing dismissal as a just sanction, a court should ordinarily consider a number of factors, including (1) the degree of actual prejudice to the defendant; (2) the amount of interference with the judicial process; ... (3) the culpability of the litigant, ... (4) whether the court warned the party in advance that dismissal of the action would be a likely sanction for noncompliance, ... and (5) the efficacy of lesser sanctions.'Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir.1992) (internal quotation marks and citations omitted)."

The Court then found that defendant’s acts prejudiced plaintiff’s case, and further cause plaintiffs to incur "considerable additional discovery expenses," and imposed an adverse inference, together with attorneys fees and costs.

District Judge Kane appears to have exerted some restraint, and no small amount of tact, in connection with this matter;

"Finally, I note Defendants and their counsel have employed ad hominem comments and sarcasm regarding Plaintiffs' counsel and impertinent descriptions of the Magistrate Judge's conduct and rulings in this matter.

Such are counterproductive to the objective of persuasion."

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Case: Cappetta v. GC Services Ltd. Partnership
Citation: 2009 WL 482439 (E.D.Va.2009)
Date: 2009-02-24
Topics: Producing party bears burden of showing "not reasonably accessible" in ESI dispute,
In this decision from the Eastern District of Virginia, U.S. Judge Luck noted that the Court had declined to order the production of defendant employee’s entire hard drive, pointing out that "such production would necessarily include information not relevant to the case…" The Court instead ordered defendant to generate and preserve a "mirror image" of the hard drive in order to prevent spoliation.

Takeaway: "Absent evidence of spoliation, the Court continues to deny Plaintiff's request for wholesale production of the hard drive."

But wait, wait. Defendant "bypassed two deadlines" to image the hard drive (or, to confirm that it had complied with the Court’s order to so image the drive.) Instead, it claimed that, more than six weeks after the last deadline, it was still "reviewing" the contents of the hard drive. (Query: Court order requires imaging and confirmation to court. How is a statement that contents of a drive are being reviewed in any way responsive to that Order?)

"The Plaintiff propounded the discovery to which the documents respond on August 27, 2008, meaning that the initial deadline to respond with any information from any employee lapsed in September 2008. Despite Defendant's contention otherwise during the February 23 hearing, the Court ordered Defendant to supplement its discovery responses to include responsive information from the hard drive no later than January 12, 2009. (Dec. 24, 2008 Mem. Op. Ex. A at 9, 14, 24, 31, 34, 36, 44.) Defendant now suggests that it believes it has produced all responsive documents otherwise, but that it intends to supplement its responses as its review of the hard drive continues. No documents from the hard drive had been produced as of the February 23 hearing."

The Court was not amused and required a bit more:

"Defendant will be ordered to produce a complete inventory of the contents of the hard drive at issue, including e-mails, to Plaintiff no later than February 27, 2009. During oral hearing, Defendant represented to the Court it believed it could meet this deadline. Defendant will also be ordered to produce all responsive documents located on the hard drive, updated discovery responses, and a concomitant privilege log, no later than March 6, 2009.FN3 Defendant is advised that to the extent it intends to withhold responsive information, including e-mails, on the basis of the attorney-client privilege and work-product doctrine, it must provide a detailed privilege log."

This matter is obviously a TBD…

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Case: Continental Group, Inc. v. KW Property Management, LLC
Citation: 2009 WL 425945 (S.D. FL 2009)
Date: 2009-02-20
Topics: Expedited motion to compel imaging of computers and electronic devices, orders to meet and confer, possession by plaintiff’s counsel of defendants’’ imaged drives pursuant to court order deemed not waiver of attorney client privilege.

Reading this case brings to mind the term "flay" (as in flaying the skin of the parties’ counsel) \. A statement like this appearing at the beginning of a discovery decision does not bode well for either party:

"The parties have been unable to cooperate to effect the imaging of the portable devices by today's deadline."

U.S. District Judge Cohn of the Southern District of Florida appears (and, I admit, appearances can be deceiving) to cut the parties some slack:

"The Court's Orders perhaps were unclear whether the filtering out of attorney client privileges documents applied to just the forensic word searching of the KW servers (to be done next week), or also to the portable computers to be imaged by today. Defendants believed such filtering was to apply to the portable devices and that the imaging should be escrowed until the filter process was agreed upon. Plaintiff believes the imaging of the portable devices was to be done by today.

The parties were unable to agree to a filtering protocol by today's deadline for imaging of the portable devices."

In ordering the imaging of defendant’s portable ESI storage drives, the Court also ruled that the possession by plaintiff’s counsel of these drives were to be considered "attorneys-eyes only," not a waiver of any attorney client privilege, although the Court did require the submission of a privilege log by defendants:

"The fact that Plaintiff has possession of the images taken off the portable devices, which are subject to Confidential-Attorney's Eyes Only classification, shall not be deemed to waive any attorney-client privilege should Defendants discover privileged material. Defendant shall serve a privilege log, if any, with respect to these two portable devices, upon Plaintiff's counsel by 4:00pm on Friday, February 27, 2009."


Compressed Time To Review Images No Prejudice to Requesting Party Under Circumstances

The Court noted that it considered the "few days" in which plaintiff could review potentially privileged material not to be prejudicial, and placed any blame for time compression on defendant. The Court noted that it was defendant’s failure to propose a specific filtering protocol rather than simple "escrow" the images prior to a sufficient time to review:

"The fact that this procedure means that Plaintiff's counsel will have a few days to view the images which may contain privileged material is not prejudicial to Defendants. Had Defendants proposed a specific filtering protocol before today's deadline, rather than a procedure to simply "escrow" the images prior to filtering, this situation would have been avoided."



Parties Directed to Cooperate to Include Filtering of Privileged Material

The Court however, also directed defendant to take initial steps in proposing such protocol with plaintiff’s counsel:

"Turning next to the issue of the forensic word search for the KW servers, for this issue the parties must cooperate to include a filtering of privileged material. In this regard, Plaintiff is correct that Defendants must propose a specific filtering protocol with the identity of any counsel who might have engaged in communications with these Defendants, and other terms which might indicate a potentially privileged communication, because this information is uniquely in the possession of the KW Defendants."

"Defendants shall propose such a specific protocol by 12 noon on Tuesday, February 24, 2009. The parties shall cooperate to finalize the word search and filtering protocol by close of business on Wednesday, February 25, 2007, in order for the searching and filtering to be completed by February 27, 2009."

Blognote:

I am going to start counting the occurrences of the term "cooperate" in these digests. This decision is one-plus page in length, and yet the word "cooperate appears --- 4 times, and so, I am pleased to introduce, the one and only "cooperation rating" system. The higher the number of occurrences in an eDiscovery decision, the less likely it is that the parties will have cooperated.

In other words (no pun intended) more is bad, fewer is good.

We’ll see how this proposed inverse proportion works out…

Cooperation Meter Rating: 4

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Case: Independent Newspapers, Inc. v. Brodie
Citation: --- A.2d ----, 2009 WL 484956 (Md. 2009)
Date: 2009-02-27
Topics: Maryland state court standard for review of discovery order, Motion for protective order prohibiting disclosure of "anonymous internet communicant."

Although not strictly an eDiscovery case, the decision of the Maryland Court of Appeals provides some insight as to the circumstances by which the identity of anonymous internet "communicants" may be the proper object of a discovery request:

"…this Court holds that, when a subpoena is challenged under a rule akin to Virginia Supreme Court Rule 4:9(c), a court should only order a non-party, Internet service provider to provide information concerning the identity of a subscriber (1) when the court is satisfied by the pleadings or evidence supplied to that court (2) that the party requesting the subpoena has a legitimate, good faith basis to contend that it may be the victim of conduct actionable in the jurisdiction where suit was filed and (3) the subpoenaed identity information is centrally needed to advance that claim. A review of the Indiana pleadings and the subject Internet postings satisfies this Court that all three prongs of the above-stated test have been satisfied as to the identities of the subscribers utilizing the four e-mail addresses in question."

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2009-02-28 Cost Shifting, Conflicting Metadata Discovery Decisions, Expedited eDiscovery in TRO Proceedings, and an Order to Conduct a (Minimum) Four Hour eDiscovery Meet and Confer

Five decisions this week (not described in order of appearance): An Eastern District of Texas eDiscovery decision expressly adopts Zubulake cost-shifting approach as well as endorsing a very broad ESI discovery approach; an Eastern District of Wisconsin overbroad ESI discovery request decision that appears to exclude discovery of metadata; an Eastern District of New York decision that requires a meet and confer to discuss production of email string headers; a Southern District of New York decision addressing expedited ESI discovery, discovery abuse, and sanctions imposition in connection with TRO and order to show cause; and a Southern District of New York decision in which the court ordered the parties to engage in at least one four-hour minimum length meet and confer to discuss and propose search terms.


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Case: Proctor & Gamble Co. v. S.C. Johnson & Son, Inc.
Citation: 2009 WL 440543 (E.D.Tex. 2009)
Date: 2009-02-19
Topics: Unsupported discovery cost claims, ED Tex adopts Zubulake approach to cost-shifting analysis

In this case from the Eastern District of Texas, U.S. District Judge Ron Clark, the parties agreed to production of documents electronically and in .tiff format and searchable by application of optical character recognition (OCR) process. This case is notable because it is one of the first where the asserted costs for producing, and then running an OCR process on paper documents, is flagged as potentially excessive. Defendant estimated that the cost would run in excess of $200,000, and that cost should therefore shift to the Plaintiff-requestor. The Court notes that the Defendant disclosed neither the number of pages of documents to be scanned into .tiff format and OCR’d, nor the associated processing cost per page. Plaintiff’s counter argument was that .tiff and OCR process estimate was only 3 cents per page.

What is (imo) encouraging is that this Court appears to take what might be inflated discovery production cost assertions with a grain of salt:

"Even assuming Plaintiff's estimate of three cents per page is low [FN2], the court finds it difficult to believe that in the age of electronically stored information so much of the requested data is only maintained in hard copy format which would require OCR to be searchable. In short, Defendant has failed to provide any support whatsoever for its estimate. "

"FN2. Plaintiff does not provide a source for this estimate. However, a simple Internet search reveals multiple software programs available for OCR conversion at costs ranging from about $200 to $600. While this option may not be appropriate for some or all Defendant's document custodians, and does not take into account the cost of the time needed to convert the documents, it does tend to make the $200,000 figure provided by Defendant appear somewhat inflated."

Reading between the lines, it may also become increasingly difficult for a party to assert that source data generally (origination evidence) is paper or hard copy based. Perhaps the documents in this action are old (meaning typewritten). Perhaps the soft-origination documents have now been destroyed within the protection of Fed. R. Civ. P. Rule 37’s safe harbor. The record does not disclose this, although the parties here are not small entities by any measure.


Zubulake Cost Shifting Analysis

The Court then performs a cost-shifting analysis using Judge Scheindlin’s Zubulake seven factor criteria, and finds that cost shifting is not warranted:

"In Zubulake, the court held that cost shifting could be considered when the data requested was relatively inaccessible and formulated a seven factor test: (1) the extent to which the request was specifically tailored to discover relevant information; (2) the availability of such information from other sources; (3) the total cost of production, when compared to the amount in controversy; (4) the total cost of production, when compared to the resources available to each party; (5) the relative ability of each party to control costs and the incentive to do so; (6) the importance of the issues at stake in the litigation; and (7) the relative benefits to the parties of obtaining the information. Zubulake, 217 F.R.D. at 322. These seven factors should not be weighted equally; rather, they should be considered in numerical order of descending importance, where factors one and two are the most important and factor seven is the least important. Id. at 323. Analysis of these seven factors does not favor cost-shifting."


Overbroad [Discovery Requests] Means Not Relevant or Not Likely to Lead to Discovery of Admissible Evidence


Also interesting is the Court’s interpretation of "overbroad" to mean either irrelevant or unlikely to lead to the discovery of admissible evidence:

"However, other than a statement that this request is "overbroad," Defendant does not contend that the information requested is not relevant, nor unlikely to lead to the discovery of admissible information. Discovery pursuant to the Federal Rules is a "broad ... regime," O2 Micro Int'l v. Monolithic Power Sys., 467 F.3d 1355, 1366 (5th Cir.2006), and the Local Rules for the Eastern District of Texas reflect this. Discovery need not even be admissible at trial to be obtained under the Federal Rules, since its purpose is to "remove surprise from trial preparation so the parties can obtain evidence necessary to evaluate and resolve their dispute." Stone v. Unocal Termination Allowance Plan, 2007 U.S. Dist. LEXIS 33082 at *4 (S.D.Tex. May 7, 2007) (citation omitted). Absent a showing, or even a claim, that the evidence sought is neither relevant nor reasonably likely to lead to the discovery of admissible information, this factor does not favor Defendant's position."

The Court also recognizes, albeit implicitly, that technological advances can, do, and will produce tools that will permit eDiscovery to be conducted in increasingly cost-efficient ways. Imo, it follows that tools that streamline processes also reduce their costs:

"OCR, while perhaps not absolutely necessary to litigation, is a tool that greatly decreases the time and effort counsel must invest in searching and examining documents. Presumably, each party would perform the OCR process in a cost-effective manner to minimize their costs. Requiring the parties to incur this cost, when the OCR process is likely to streamline the discovery process and reduce the chance that either side will employ tactics designed to hide relevant information in a mountain of difficult-to-search documents is neither unreasonable nor burdensome."
One the other hand, (see next decision)


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Case: Kay Beer Distributing, Inc. v. Energy Brands, Inc
Citation: 2009 WL 425821 (E.D.Wis. 2009)
Date: 2009-02-20
Topics: Overbroad ESI discovery requests denied; Term search in email limited to body of message adequate.

In this decision from the Eastern District of Wisconsin, Plaintiff moved to compel production of ESI from Defendant. It appears that while Defendant’s search produced a total of 17 gigabytes of data consisting of 56,547 documents (and in turn comprising hundreds of thousands of pages) not all of the documents were produced to Plaintiff. Defendant maintained that many of the documents were not relevant, and that only documents in which the term "Kay Beer" was referenced or appeared "in the body of the email" were produced. Plaintiff asserted this to be an incomplete production. U.S. District Judge Griesbach sided with the defendant and denied the request for supplemented ESI production.

Perhaps, and just perhaps, a better approach might have been to show why (with appropriate expert testimony) the term "Kay Beer" or references to "Kay Beer" which occurred outside the body of the emails in question (in metadata perhaps) would have been appropriate. Perhaps a better structured Rule 26f conference addressing the issue in advance might have avoided this motion practice.


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Case: Gucci America, Inc. v. Gucci
Citation: 2009 WL 440463 (S.D.N.Y. 2009)
Date: 2009-02-20
Topics: Expedited ESI Discovery Violation Sanctions; failure to specify ESI search conducted

In this fashionably stylish TRO decision from the Southern District of New York, the parties agreed to an expedited discovery schedule in connection with the court’s determination of an order to show cause. Defendant’s explanations included: failure to comprehend that (in Federal Courts) discovery obligations are continuing, and that hallowed uber-explanation: "computer illiteracy" --- U.S. Magistrate Judge Francis wasn’t buying any of it:

"Mr. Litwak has offered a variety of excuses for failing to comply with the discovery requirements of the TRO. In part, he contends that he did not realize that he had a continuing obligation to produce documents once the initial production was made. (Tr. at 48). He also maintains that he provided all documentation to his prior counsel and is unaware of what counsel then forwarded to Gucci's attorneys. (Tr. at 81-82). Finally, he blames his failure to produce electronically -stored documents on his ignorance of computers, and he asserts that it was necessary to enlist his wife's assistance to search his computer files. (Tr. at 46-47). None of these explanations withstands scrutiny."

"Because Gucci persistently sought additional documentation from Mr. Litwak, he could not have failed to understand the continuing nature of his discovery obligations. Although it is conceivable that Mr. Litwak gave his former attorney more documents than were ultimately produced, he has failed to identify with specificity even one such document. Similarly, Mr. Litwak's claims of computer illiteracy are entirely conclusory. He has never explained what searches he and his wife did conduct, what files were opened, and why the forensic examination uncovered numerous documents that he had been unable to locate."

"Finally, there is compelling evidence that Mr. Litwak was not candid during the discovery process. Despite the fact that counsel for Gucci asked Mr. Litwak about licensing agreements during the September 17, 2007 deposition and confirmed that Mr. Litwak had produced all documents about prospective licensing arrangements, Mr. Litwak failed to mention his discussions with Mr. Balistreri, even though he had sent Mr. Balistreri a draft contract in June and sent him an e-mail referencing that contract just two days after the deposition. (Tr. at 52-55). Mr. Litwak's explanation that he "forgot" about the prospective water license while he was being deposed is simply not credible."


**************
Case: Lapin v. Goldman, Sachs & Co.
Citation: 2009 WL 222788 (S.D.N.Y. 2009)
Date: 2009-01-23
Topics: Class action pre-certification meet and confer, with parties and experts ordered to discuss proposed ESI search terms; party’s objection to concept of search terms

In this class action case from the Southern District of New York, U.S. Magistrate Judge Eaton ordered the parties, and their computer experts, meet for "at least four hours" to discuss proposals for ESI search terms. The following excerpt wins this week’s cupidity award:


"In any event, Plaintiff has resumed making objections to the entire concept of search terms."
Defendant, to its credit, made what appears to be a good faith effort to craft unilaterally craft a search terms list."

"On December 22, 2008, Defendants served their list of proposed search terms (Exh. G, first enclosure). Defendants' list consists of 75 company names from Plaintiff's Document Requests, plus 23 other search terms including:
align!
(bank! or IBD) w/10 analyst
(bank! or IBD) w/15 influence
(bank! or IBD) w/25 report
(bank! or IBD) w/25 research
impartial!
(IPO or offering) w/25 report
(IPO or offering) w/25 research
pentathlon
pressur!"

Magistrate Judge Eaton’s response:

"I have no expertise in this area, but I think Defendants' first effort shows good faith."

Judge Eaton then addresses Plaintiff’s assertions as to the concept of search qua search, dismisses Plaintiff’s ruminations, and orders Plaintiff to compile and provide a list of search terms, and, no surprise here, hold another meet and confer with Defendant’s counsel (for at least four hours), all the while being mindful to discuss costs and follow-up searches using additional terms:

"At page 24, Plaintiff asserts that the entire search term approach is of questionable validity, but if the Court adopts it, Plaintiff wants an order requiring Defendants to submit "revised" search terms, and only then would Plaintiff have to suggest his own search terms. Instead, I direct Plaintiff to serve his own list of search terms, and then the attorneys and their computer experts must promptly hold a meeting with at least four hours of discussion about proposals for search terms. Among other things, they should discuss (a) the estimated cost of the search and (b) the cost of a possible follow-up search with a supplemental list of search terms."

Ok, I really have to comment on the level of competency (or lack thereof) exhibited by Plaintiff’s counsel. A challenge to a search protocol, if well articulated (and with expert testimony) may (and imo is) robust litigation practice. That said, any basis for insisting the world is flat in the 21st Century is, well, kind of thin. I think it is also clear that Magistrate Judge Eaton was being fair --- not the Plaintiff’s counsel, but to Plaintiff, who might otherwise have been gravely prejudiced by his counsel’s litigation, er, um, strategy (or is it tactic?)…


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Case: Brookdale Univ. Hosp. & Medical Center, Inc. v. Health Ins. Plan of Greater N.Y.
Citation: 2009 WL 393644 (E.D.N.Y. 2009)
Date: 2009-02-13
Topics: Failure to produce eMail "string headers;" order to produce missing email information stayed pending court ordered meet and confer.

In what is becoming a common occurrence, Courts are declining to referee ESI discovery disputes without first requiring the parties to make some effort to meet and confer to resolve same. (Hmmm. Isn’t that already required by Fed. R. Civ. P. Rules 26f and 37?). Here, the Court directed Plaintiff to provide missing email information (metadata is not mentioned, which makes one wonder how the initial discovery request was articulated).

"On January 30, 2009, the Court directed plaintiff to "provide defendants with ... the missing information from the produced emails by [February 6, 2009] ("to","cc", "re")." By letter dated February 6, 2009, plaintiff informs the Court that [Jamaica Hospital's Novell] GroupWise e-mail system is set to a "classic" default setting which does not include "header" information (including addresses, "cc's" or subject lines) when an e-mail is replied to and that e-mail is no longer available for retrieval. This information is supported by the statement of Ms. Larios, GroupWise Service Administrator, at Jamaica Hospital who spoke with Novell. Document 130."

"In response, HIP states that if the emails at issue are "separately produced ... the missing header problem would largely be alleviated, since the final email of an email string always includes standard header information." Document 131. HIP requests that the Court direct plaintiff to (1) provide a written certification attesting to the circumstances surrounding the missing email string headers; (2) re-produce all emails in electronic form; (3) search its computer systems to locate and produce each of the included emails; and (4) to the extent that any of the included emails cannot be located, fully explain the surrounding facts and circumstances. Id. Plaintiff opposes HIP's requests, stating that "the information that is not on the ‘header’ is not maintained, as it was never created," and that the "missing information would not be revealed if the e-mail is viewed in native form." Document 132."

Not surprisingly, the Court was not in an argument-buying mood. While it did not issue an order compelling production, the Court sent the parties off to meet and confer-ville:

"The Court is not remotely satisfied with plaintiff's explanation. The default setting on plaintiff's system does not excuse plaintiff from producing the requested materials. Just imagine if the shoe was on the other foot, and it was defendant claiming it could not produce a large number of emails showing who the emails were sent to. Plaintiff would not be satisfied with the proffered third-hand explanation of an administrator as plaintiff has provided here, and rightly so. The Court will stay HIP's request. Brookdale and HIP's counsel shall attempt to resolve this issue by February 20, 2009"

Moral of the story (imo, as always): When it comes to eDiscovery and digital evidence managemnt, make sure to meet and confer. Early. And often.

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2009-02-20 Survival of Spoliation in Subsequent Forum; 2d Circuit Discovery Abuse Standard of Review Reprised; Forensic Imaging Ordered to Ascertain Creation Date

Three for this week. The Puffin case tells us that a duty to preserve, once triggered, can live on in a separate action brought in a different forum. The Agiwal decision reminds us of the standards for review (and reversal) of eDiscovery decisions, and the Hinojos decision, at least imo, stands for the proposition that mere testimony may not help establish the provenance of undated computer generated information.

****************
Case: Kvitka v. Puffin Co., L.L.C.
Citation: 2009 WL 385582 (M.D.Pa. 2009)
Date: 2009-02-13
Topics: Survival of duty to preserve in subsequent related action, spoliation, email exchanges on discarded laptop, notices and letters to preserve evidence; type of spoliation sanctions imposed on spoliator’s claims and non-spoliating party’s counterclaims.

Another week, another duty to preserve, and another spoliation decision. In this case from the Middle District of Pennsylvania, involving an antique doll dealer, and an antique doll industry magazine, U.S. District Judge Sylvia Rambo imposed an adverse inference sanction against a spoliating party whose duty to preserve survived conclusion of a related prior state court action. Despite the gravity of a spoliation hearing, the Court found time for some wry humor…see Footnote 3.

Here, prior to the commencement of the first action in state court (sometime during September 2005 which I will presume is what the Court means by "shortly after" August 30, 2005) the defendant sent a preservation notice/letter. In January 2006, defendant produced its emails in response to plaintiff’s request therefore. The Court does not indicate the outcome of the state court proceedings.

Now, I *think* that the following occurred in the subsequently filed case in Federal Court (the decision is not clear, but it’s reasonable to assume so):

In response to an interrogatory, plaintiff stated that she began having trouble with her "old" laptop beginning in February 2006, and described these problems in a subsequent deposition: ("…it was doing totally wonky things, ridiculous things"). Plaintiff then disposed of the old laptop without preserving potentially relevant evidence.

"On or about February 27, 2006, Kvitka notified her computer technician, Chuck Tressler, of her computer problems, and Tressler-without examining the old laptop-informed her that she should purchase a new laptop. ( Id. Ex. G at 51). Tressler ordered a new laptop for Kvitka on February 27, 2006, and Kvitka received email confirmation of this order on the old laptop, which she forwarded to Tressler via the old laptop. ( See id. Ex. G at 45; Ex. F at 16-17, 44-45.) The new laptop was shipped on or about March 7, 2006 and was set up by Tressler within about one week. ( Id. Ex. G at 16-17.) Sometime later in March 2006, Kvitka threw her old laptop into the trash. ( Id. Ex. F at 29.) On March 16, 2006, during a conference regarding Plaintiffs' request for emails in Defendants possession, the commonwealth trial court judge inquired about the status of the original emails. ( Id. at 6.) Plaintiffs failed to inform the judge that the old laptop had been discarded at the conference or in subsequent written correspondence, and instead opted to discontinue the pending state court litigation. ( Id. at 6-7.) Plaintiffs, then, filed the instant federal suit on April 25, 2006, yet failed to inform Defendants that Kvitka had disposed of her old laptop and its hard drive until October 27, 2007."

Judge Rambo was clearly not amused at Plaintiff’s explanation as to both evidentiary search and preservation efforts. Let’s just say it’s not a good sign when a judge describes an assertion as "absurd." Perhaps particularly insightful is plaintiff’s "I mean it’s a computer, not a person" comment:

"Meanwhile, Kvitka maintained until January 2008-and her computer technician implied during deposition testimony-that no files or emails were recovered from her old laptop. ( Id. at 8.) On January 14, 2008, Defendants moved for an order of inspection of Kvitka's new laptop, at which time Plaintiffs' counsel informed Defendants that "some" emails had been recovered from her old laptop and appeared on her new laptop. ( Id.) Kvitka, while insisting that no data had been transferred from her old laptop to her new laptop, gave the following absurd explanation as to how she located files and emails on her new laptop that she nor her computer technician ever transferred from her old laptop:

"Q. How did it come about that you found these documents? Was-

"A. I looked for them really hard, and I found them. At the time that this was going on, there was a lot of other things that were going on in my life, a lot. And I don't think that I quite understood how important it was for me to find them, plus I was real interested and real devastated mainly by the fact that I lost a lot of personal things, like I said, that had to do with my kids that were just real important to me. And [my attorney] kept saying to me, look, it's real important if you can find anything. So what I did was I sat down for hours. Also some of these things turned up in places that I didn't expect to find them, like I said. I mean it’s a computer, it's not a person. There were things that for whatever reason showed up in files that they weren't supposed to show up in. I had a picture that showed up on my desktop. I had a file that showed up in a place that was an email. I had things that just showed up in places that they weren't supposed to show up. And so I went through every inch, every centimeter, every place that anything could be and I came up with the things that I then forwarded to my attorney."

Spoliation Approach in Pennsylvania Federal Courts

The Federal Courts in Pennsylvania appear to follow a "purely Federal" approach to spoliation, relying on Federal "common law" and 3rd Circuit decisional authority. For instance, the Ogin case cited by Judge Rambo relies on the 3rd Circuit’s Mosaid decision, which in turn relies on both Southern District (Zubulake) and 2d Circuit (West v Goodyear) for fundamental spoliation principles. Which, to my mind, also make Pennsylvania an "ordinary negligence" spoliation standard jurisdiction.

Ok, back to the Puffin case:.

"Defendants argue that Kvitka's intentional discarding or destruction of her old laptop that contained email files directly related to her claims against them prohibits them from defending against her claims and prosecuting their cross-claims, thereby entitling them to summary judgment as a sanction for spoliation of the evidence. As a general rule, "[a] party which reasonably anticipates litigation has an affirmative duty to preserve relevant evidence." Howell v. Maytag, 168 F.R.D. 502, 505 (M.D.Pa.1996). Courts define "spoliation" as "the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." Ogin v. Ahmed, 563 F.Supp.2d 539, 542 (M.D.Pa.2008). When a party has destroyed evidence, courts may appropriately impose sanctions, including dismissal of claims, the exclusion of countervailing evidence, or a jury instruction on the "spoliation inference," which permits the jury to presume that "the destroyed evidence would have been unfavorable to the position of the offending party." Id. (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 78 (3d Cir.1994)). Courts must consider the facts and circumstances when fashioning an appropriate sanction, but ultimately the use and fashioning of sanctions appertain to "the inherent power of district courts ... to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Baliotis v. McNeil, 870 F.Supp. 1285, 1289 (M.D.Pa.1994) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (internal quotation marks omitted))."

"Courts contemplate the following "key considerations" before determining an appropriate sanction: (1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future. Schmid, 13 F.3d at 79. There is no question that Kvitka intentionally discarded the laptop despite instructions not to dispose of it.

Accordingly, the court will review each of these factors."

Fault – Disposal of Laptop Containing Relevant Evidence

Plaintiff maintained that her decision to throw out the old laptop was "’an innocent and routine effort [] to maintain her business’" and that it was the damage to the hard drive on the laptop, rather than her disposal of same, that cause the loss of data. Unfortunately for plaintiff, the judge declined the invitation to consider the disposal of a damaged laptop containing relevant evidence as anything but "routine" The Court finds that plaintiff acted in bad faith and fault:

"Defendants argue that Kvitka acted in bad faith when she disposed of her old laptop, acting with the greatest degree of fault. The court agrees.

"Kvitka acknowledged that "this entire thing has a lot to do with some emails," yet nevertheless discarded her old laptop that contained the emails relevant to her claims in direct defiance of instructions provided to her attorney. She discarded the laptop despite advice from her computer technician that skilled professionals could possibly recover files relevant to the litigation. ( See Doc. 58 Ex. G at 19.) After discarding the old laptop, she failed to inform the judge presiding over her first lawsuit that she had engaged in such conduct despite the judge's direct inquiries and, instead, discontinued that litigation and filed the instant complaint in federal court.

"During the course of this suit, she has conducted herself in an evasive and confrontational manner during depositions and has attempted to mislead the court by withholding evidence that she now claims was transferred without explanation from her old laptop to her new laptop. When confronted by defense counsel regarding her deception, she refused to answer questions, concocted an outlandish story, and attempted to manipulate the facts of the case by substantively changing deposition testimony and an interrogatory answer with transparently evasive failure of recollection answers. She gave no explanation for these changes."

"Plaintiffs challenge this by insisting that Kvitka's decision to throw out the old laptop amounted to an "innocent and routine effort[ ] to maintain her business," and that "[t]he damage to the laptop hard drive, which was not caused by Plaintiffs, is the primary cause of the loss of electronic e-mail data." The court simply cannot accept that under the circumstances described above Kvitka's disposal of the old laptop constituted an "innocent and routine" effort to maintain her business. To the contrary, she testified that the old laptop was acting "wonky" and "ridiculous," but she could still send emails from the old laptop. She, nonetheless, ordered a new laptop in haste, disposing of the old laptop with knowledge that the emails could be retrieved or recovered and that she needed to preserve the old laptop's hard-drive. Kvitka has attempted to avoid this reality by manipulating testimony, yet she would have done well to heed the words of the great playwright Henrik Ibsen who wrote, "Many a man can save himself, if he admits he's done wrong and takes his punishment.FN3""

FN3. Henrik Ibsen, A Doll's House (J.W.Lowell Co. 1889) (1879)."


Prejudice

The Court also found that Plaintiff’s actions had prejudiced defendants ability to both defend against plaintiff’s claims and prosecute its own counterclaims.

"As Kvitka admitted, the facts giving rise to her claims as well as Defendants' cross-claims have "a lot to do with some emails." Accordingly, to properly defend or prosecute this case, Defendants would need access to Kvitka's old laptop to inspect and investigate her email program and hard-drive."


Sanctions Imposed In Connection with Plaintiff’s Claims, and Defendant’s Counterclaims

It’s interesting to note that in this case the Court imposed sanctions of differing severity against plaintiff, imposing terminating sanctions against plaintiff for plaintiff’s claims, but imposing the (arguably) less drastic sanction of an adverse inference against plaintiff in connection with defendant’s counterclaims:

Plaintiff’s Claim

"The court will dismiss Plaintiffs' claims. As described above, Plaintiffs acted with the highest degree of fault, acting in bad faith. Kvitka destroyed the laptop necessary for Defendants to effectively challenge the validity of Plaintiffs' claims by throwing it in the trash. She engaged in this conduct, despite instruction from her attorney to maintain the old laptop, the hard-drive, and all relevant emails as well as instruction from her computer technician that data could be recovered from a damaged hard-drive. Moreover, Kvitka has been manipulative and evasive throughout the litigation in an apparent attempt to succeed on her claims and downplay the severity of her acts. These acts have severely prejudiced Defendants by stripping them of information necessary to defend against Plaintiffs' claims. Under such circumstances, the court has no other option but to dismiss Plaintiffs' claims with prejudice."

Defendant’s Counterclaims

"The court, however, does not believe such a drastic remedy is necessary for Defendants' cross-claims, because Defendants have evidence that if combined with an adverse inference may persuade a jury to find in their favor on their fraud based claims. The Court of Appeals has explained that "[w]hen the contents of a document are relevant to an issue in a case, the trier of fact generally may receive the fact of the document's nonproduction or destruction as evidence that the party that has prevented production did so out of the well-founded fear that the contents would harm him." Ogin, 563 F.Supp.2d at 542 (citing Brewer v. Quaker State Oil Ref. Corp., 72 F.3d 326, 334 (3d Cir.1995)). Courts will give an adverse inference instruction if (1) the evidence in question was within the party's control, (2) it appears that there has been actual suppression or withholding of the evidence, (3) the evidence destroyed or withheld was relevant to claims or defenses, and (4) it was reasonably foreseeable that the evidence would later be discoverable. Id. at 543.

"Here, each element is satisfied. First, Kvitka testified that Plaintiffs retained the old laptop in their exclusive control. Second, Kvitka testified to intentionally discarding the old laptop. Third, the destroyed emails and other evidence on the old laptop would have greatly assisted Defendants in prosecuting claims based on emails that Plaintiffs destroyed. Finally, Kvitka has admitted that she knew to preserve the emails because of their relevance, but still discarded the old laptop. Because the elements have been satisfied, the court will permit the adverse inference instruction and will preclude Plaintiffs from arguing that individuals tampered with the paper copies of emails possessed by Defendants."


Note: It’s also clear that attorneys are utilizing notices to preserve or letters regarding preservation (my preference) but the content of these letters show that most are still at the very beginning of the learning curve at best, and at worst underscore the lack of understanding of basic technology precepts. The last line of this excerpted quote from defendants’ counsel preservation letter is exemplary:

"In turn, I trust that you will dutifully inform your client, whether or not her previous attorneys at Stark & Stark have already done so, that her computer(s) particularly her computer hard drive(s), and all her accumulated email account message files going back several years must be safeguarded and preserved as potential material evidence. As you know, emails can be deleted, but they cannot be erased."


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Case: Agiwal v. Mid Island Mortg. Corp. (2d Cir. 2009)
Citation: --- F.3d ----, 2009 WL 350717
Date: 2009-02-13
Topics: 2d Circuit standard for review of discovery abuse decisions

Just a quick reminder that in the Federal Court system, a discovery abuse decision issued by either a Magistrate Judge or District Judge is reviewed on a very high "abuse of discretion" and determinations of a litigant’s fault are reviewed using a "clear error" standard. Not an eDiscovery or digital evidence case, but applicable nevertheless, and even to pro se litigants. The latest from the United States Circuit Court of Appeals for the Second Circuit:

"We review a district court's imposition of sanctions under Rule 37, including dismissal, for abuse of discretion. See, e.g., Bobal v. Rensselaer Polytechnic Inst., 916 F.2d 759, 764 (2d Cir.1990); see also Sieck v. Russo, 869 F.2d 131, 134 (2d Cir.1989) ("We ... prefer to ... provide the teeth to enforce discovery orders by leaving it to the district court to determine which sanction from among the available range is appropriate."). However, we have recognized that "dismissal with prejudice is a harsh remedy to be used only in extreme situations, and then only when a court finds ‘willfulness, bad faith, or any fault’ " by the non-compliant litigant. Bobal, 916 F.2d at 764. Whether a litigant was at fault or acted willfully or in bad faith are questions of fact, and we review the District Court's determinations for clear error.FN2 See Friends of Animals Inc. v. U.S. Surgical Corp., 131 F.3d 332, 334 (2d Cir.1997).

"Several factors may be useful in evaluating a district court's exercise of discretion to dismiss an action under Rule 37. These include: "(1) the willfulness of the non-compliant party or the reason for noncompliance; (2) the efficacy of lesser sanctions; (3) the duration of the period of noncompliance, and (4) whether the non-compliant party had been warned of the consequences of ... noncompliance." Nieves v. City of New York, 208 F.R.D. 531, 535 (S.D.N.Y.2002) (citing Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 852-54 (2d Cir.1995)). Further, we note that dismissal pursuant to Rule 37 is appropriate "not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a sanction." Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976)."


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Case: Hinojos v. Park City Mun. Corp.
Citation: 2009 WL 392450 (D.Utah 2009)
Date: 2009-02-17
Topics: Re-opening discovery, forensic imaging ordered to ascertain creation date of undated printout.

This short decision is notable in that the Court not only re-opens discovery, but requires that forensic image of a computer be created to ascertain the creation date and time of undated interview notes produced after the discovery period had closed. Although not cited by the Court, I think the decision to not place undue reliance on testimony supporting the provenance of computer generated information is clearly in line with the 9th Circuit’s (BAP) decision in In re VeeVinhnee

The Court was not amused by the late production and imposed a cost-shift to the producing party:
"Plaintiff proposes that "an independent and mutually agreed upon expert ... obtain ... data from Mr. Cashel's computer" FN8 to show the creation and modification dates of the investigative memorandum and Brittany Angelovich interview notes. While Defendant has outlined its explanation of the late production of these materials,FN9 information Defendant has later produced muddies the water.FN10 Plaintiff is entitled, at his sole expense, to verify the truth of what Defendant is saying."

The Court was also wary of a non-forensically sound image creation and analysis:

"The proposal for direct access to the Cashel computer is too risky, however. FN11 If Plaintiff will pay for a mutually acceptable independent expert to image the storage on the Cashel computer , then Plaintiff's forensic expert may take possession of and have access to the image only for purposes of examining the data files for the investigative memorandum and Brittany Angelovich interview summary (and any backups or fragments of those files) to determine creation and modification dates, and edit history."